Nearshoring May Have a Greater Impact Than NAFTA: Experts

The nearshoring phenomenon is poised to impact various sectors of the Mexican economy. Industry insiders believe that the country can grow by 4% over the following years, if it harnesses this opportunity. However, Javier Llaca, COO, Fibra Monterrey (FIbra MTY), noted that the country must address several challenges like energy distribution and infrastructure. 

Llaca considers nearshoring one of the most important drivers for the Mexican economy, even more relevant than NAFTA. For this reason, he suggested harnessing this momentum and spreading its benefits nationwide. “We must take advantage (of nearshoring) because, in the coming years, Mexico is expected to grow up to 4%, which can be attributed to nearshoring. This could be even more if we have good communication among companies,” Llaca said. 

According to high executives from infrastructure and logistics companies, investments will stay in the country for at least 10 years and are poised to benefit the real estate and logistics sectors. Experts pointed out that if the country wants to keep these investments and give investors certainty, it must address several issues like deficient infrastructure, energy distribution and the development of qualified workforces, as well as addressing insecurity and guaranteeing the rule of law. 

According to Llaca, if Mexico captures at least 3% of the companies exiting China, the capacity for development of more industrial space would double the current 67 million m². The creation of new industrial space is essential to catching more investments, as occupancy rates of the main real estate companies, especially Real Estate Investment Trusts (FIBRAs) are above 95%. According to Fitch’s Ratings, during 2Q23, Fibra Prologis and Fibra Soma reported the highest occupancy rates both with 98%, followed by Fibra Terrafina with 97%, Corporación Inmobiliaria Vesta and Fibra Monterrey with 95% and Fibra UNO with 94%. 

The transportation sector is experiencing similar growth. Aby Lijtszain, Executive President, Traxión, noted that its mobility division generates over 30% of its revenue, which proves the importance of this division for nearshoring as most of its infrastructure is located in the north and Bajio area. However, Lijtszain noted that this trend is not new as the regions Traxión serves have been continuously receiving investment for at least five years. "This trend is not new; it has a new name, but we have benefited from nearshoring before," Lijtszain added.